Archive for May, 2011

With the new SPIF Laws coming into effect this July, we thought it would be a good idea to get some straight forward information out to our users.

To help understand it better we contacted Steve Bates, National Accounts Manager of Mack Canada, and very familiar face in the waste industry, to write a short piece that makes the upcoming changes a little easier to understand, and what the changes could mean to you and your fleet.

Information from: Steve Bates, National Accounts Manager Mack Canada – May 2011.

SPIFF legal Straight truck Vehicles are set to come into effect July 2011.   1st HOW DOES THIS IMPACT THE WASTE INDUSTRY?

First off, NO NEED TO PANIC ALL EXISTING EQUIPMENT REGARDLESS OF AGE IS STILL LEGAL TO RUN UNTILL AT LEAST DEC. 31 2020, SOME NEWER EQUIPMENT CAN BE USED EVEN LONGER, AS FAR OUT AS DEC.31 2025.   DURING THIS GRANDFATHERING PHASE THE OLD ONTARIO WEIGHT LAWS WILL STILL BE USED FOR NON OR PRE SPIF VEHICLES AND THE SPIFF REGUALTIONS WILL APPLY TO SPIFF VEHICLES.

ALL TRUCKS MANUFACTURED AFTER JULY 1ST 2011 WILL HAVE TO ADHERE TO ONE OF SEVEN STRAIGHT TRUCK SPIFF CONFIGURATIONS.  FAILURE TO ADHERE WILL RESULT IN A NON LEGAL TRUCK THAT CAN STILL BE USED BUT WOULD PAY A HEAVY GVW PENALTY, TO THE POINT IT MIGHT NOT MAKE ECONOMIC SENSE TO USE.  IT IS VERY IMPORTANT TO MAKE SURE THAT IF YOU ARE BUYING A NEW TRUCK MANUFACTURED AFTER JULY 1ST THAT IT IS SPIFF COMPLIANT.  IT MUST ALSO BE CORRECTLY LOADED SO DEPENDING ON THE SPIFF CONFIGURATION ALL DIMENSIONS AND AXLE LOADINGS ARE ADHERED TO.

THE EASIEST WAY TO BREAK THIS DOWN IS TO LOOK AT HOW SPIFF WILL AFFECT THE VARIOUS CLASSES OF CURRENT REFUSE VEHICLES.

FRONT END LOADER

A tag axle configuration is not SPIFF compliant and can no longer be used effectively.  All rear axle bogie spacing’s will now be legal for 18,000 kg.  This will  increase the legal GVW of a 54” spacing by 800 kg.  Not much change to the typical FEL being used currently.  Today’s tandem FEL are already SPIFF compliant.  One change that is worth mentioning is you now have to carry a minimum % of overall GVW on the front axle.  For the tandem truck this is 19%. Carrying this weight on the front axle is a non issue for a tandem FEL but will be an issue on other configurations especially on conventional trucks.

REAR LOADER

It would be possible to build a” SPIFF 3 axle truck plus auxiliary”.   This is a self steering pusher rated at 6000 kg, min. 2.3 meters ahead of the forward tandem axle and must be equipped with load equalizing with the tandem suspension so that the lift axle carries 33% of the tandem weight.  Eg 18,000 kg on the tandem, 6,000 kg on the self-steering pusher.   This weight equalization is easily accomplished with an air ride rear suspension and there are other devices currently being tested that will become available in all liklihood sometime soon.  If using this pusher axle set up keep in mind you must carry 19% of the overall GVW on the front axle.   This might be difficult with a heavy cantilevered hopper and full weight displaced on the pusher and tandem.  How to get the weight forward?  Maybe a return to cab overs might prove to be the solution?  As with all steerable lift axles no in cab controls are allowed.

Plain 3 axle trucks with tandem rears, as we know them to day already comply with SPIFF.  Attention must be paid to the front axle loading of 19% of GVW.  There should be no problem with this configuration, saying that I would still want to see a weight distribution with particular attention to the front axle loading.

Roll OFF – TRI AXLE

This configuration will be a big challenge, and the truck that replaces today’s tri axle will be noticeably different after July 1st.from what we know today.   The pusher axle must be self-steering with 50% load equalizing with the tandem suspension.  Lift axle controls cannot be located in the cab and the lift axle must weight equalize at 50%.   The big point to consider is 23% of the GVW must be on the front steer axle.  That will be a huge challenge especially when tri axle roll offs are required to carry so many long variable loads such as compactor containers and self contained compactors.   Another point is today’s single stage tilt cylinders will be fighting for the same frame real estate as the steerable lift axle.  Due to the additional room required for wheel cuts, a change in configuration such as tilt telescopic cylinders or perhaps a scissor lift mechanism might be required.  Perhaps a tandem front steer chassis might work which you see on the road today in the Ready Mix industry.  This configuration requires much attention.  Know what you are buying and what it will legally carry.

ROLL OFF – TANDEM

Very similar considerations as mentioned above for rear loaders.  19% front axle loading should be achievable, with the exception of very long loads.  All bogie spacing will now be rated at 18,000 kg as mentioned under FEL.  Very little change to this configuration, maybe more of an emphasis on weight with lower body weights translating into additional payload.

SIDE LOADER

Little change, as most of these vehicles are straight tandem trucks, which have been discussed in aforementioned scenarios.

In closing, after July 1st, know what you are buying and what the payload capabilities are?  Make sure what you think you are buying will do the intended job.  You might want to see a loaded weight distribution to get a clear picture.  The law is the law and as time goes on no one can predict how it will be administered or interpreted; only time will tell.  The tri axle roll off will be a real challenge and at this time I would not want to predict what the best solution and outcome will be.    All what I talk about is covered under the existing Highway Traffic Act Regulation 457/10 and is available on line under e laws.  I could not touch on all the details that are shown in this 75-page document.

If you are buying a truck that is manufactured prior to July 1st 2011 you still should find out exactly what the grandfathering will entail.   What will the value of a particular pre SPIFF truck be worth as it nears its grandfather date?  All important things to consider.

This is a major change and I would urge you to consider all factors whether buying a pre SPIFF truck in the next few months or a SPIFF legal truck manufactured after July 1st 2011 or a late model used truck.

 

Steve Bates is the National Account Manager for Volvo Trucks Canada and Mack Trucks Canada.  Steve has been with Mack Canada for 12 years, and is no stranger to the waste industry.

steve.bates@macktrucks.com

416.669.1313

 

For more technical information on SPIF regulations go to the MTO website

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Management Commentary

Reported revenues increased $158.8 million or 60.1% from $264.0 million in the first quarter of 2010 to $422.9 million in the first quarter of 2011 due in large part to our acquisition of Waste Services, Inc. (“WSI”).

Organic gross revenue, which includes intercompany revenues, grew 3.9% on a consolidated basis and is comprised of total price and volume growth of 3.3% and 0.6%, respectively. Total price and volume improvements in Canada were 4.2% and 0.7%, respectively, and 2.6% and 0.5% in the U.S. Each revenue growth component has been prepared on a comparable basis, as if WSI’s operations were combined with ours in the current and previously comparable quarter, and has assumed a foreign currency exchange (“FX”) rate of parity when prepared on a consolidated basis.

Strong revenue growth translated into strong adjusted EBITDA(A) and operating income growth. Adjusted EBITDA(A) was $123.1 million, or 62.1% higher, in the first quarter of 2011 versus $75.9 million in the same quarter a year ago. Our first quarter adjusted EBITDA(A) margin was 29.1% compared to 28.8% in the first quarter of 2010. Adjusted operating income(A) was $61.7 million, or 69.1% higher, in the quarter versus $36.5 million in the comparative period last year.

We also generated higher adjusted net income(A) quarter over quarter. Adjusted net income(A) for the first quarter of 2011 was $28.1 million, or $0.23 per weighted average diluted share (“diluted share”), compared to $18.7 million, or $0.20 per diluted share in the comparative period.

Free cash flow(B) for the quarter totaled $70.6 million and was 68.6% higher than $41.9 million achieved in the comparative period last year. Our free cash flow(B) margin was 16.7% in the quarter compared to 15.9% in the first quarter of 2010. Free cash flow(B) growth was the result of strong operating income, partially offset by higher interest expense and higher capital and landfill purchases. The increase in each of these measures is largely attributable to our acquisition of WSI.

“Our first-quarter results were in line with expectations and we believe we are on track to achieve the outlook we provided for our 2011 financial performance,” said Keith Carrigan, Vice Chairman and Chief Executive Officer of IESI-BFC Ltd. “We overcame a number of headwinds in the quarter to achieve revenue growth of 60.1% and consolidated organic gross revenue growth of 3.9%. Our revenue improvement, combined with lower SG&A expenses as a percentage of revenue, translated into adjusted EBITDA(A) margin expansion of 30 basis points and free cash flow(B) margin expansion of 80 basis points, compared with the same period a year ago. We are pleased with these results, particularly given the challenges that we faced in the quarter due to harsher comparative weather conditions in certain parts of the United States and Canada.”

Mr. Carrigan continued, “In Canada, we delivered solid pricing growth, but harsher weather conditions in the quarter, and most notably in March, resulted in us receiving lower municipal solid and special waste volumes at our landfills. However, our outlook for the year anticipates that we will fully recoup these volumes as the spring seasonal cycle and our organic sales activities take effect, which will result in a stronger comparative volume performance over the balance of the year. Like Canada, the U.S. northeast segment experienced harsher weather conditions as well. However, special and municipal solid waste volumes and higher pricing drove landfill revenue growth, while acquisitions boosted the industrial service line. In the U.S. south segment, we achieved volume growth in almost all service lines.”

“With our anticipated revenue and adjusted EBITDA(A) growth through the balance of the year, we reaffirm our free cash flow(B) guidance of approximately $270 million in 2011,” Mr. Carrigan added. “We will continue to deploy these proceeds strategically in order to deliver the optimal return to our shareholders. Even following an active year of acquisitions, we have a robust pipeline and there are attractive opportunities.

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